Fruits and Vegetables (F&V) Supply Chains in India: Emerging Models and Issues

1. Fruits and Vegetables (F&V) Supply Chains in India: Emerging Models and Issues Meeta Punjabi Vijay Sardana FAO & MoA New Delhi, India

2. Outline • Background of the Study • Literature Review: Situation in other Developing Countries • Emerging Models • Requirements for setting up Supply Chains • Issues in Setting up the Chain • Areas of Intervention by Govt. agencies/donor groups • Examples: Co-ordination between different players in setting up the chain (Role of Govt, NGO, Credit, supermarket chains)

3. Background of the Study • The marketing of F&V in India is changing dramatically • Change from the traditional markets to modern formats • Entry of big retail names – Reliance, ITC, Aditya Birla Group, Godrej, Bharti Airtel, Adani Group • Initiation of organized retailing and wholesaling of F&V: • Reliance Fresh, Chopal Fresh, Namdhari’s Fresh • FAO and MoA undertook the current study to understand the ground situation • Emerging models for backward and forward linkages • Issues in setting up the chains

4. Literature Review • The perception of retail chains being a phenomena of the developed countries has changed significantly • Significant presence in developing countries – Latin America, Asia, Africa • What does retail chains have to do with development? • Development perspective: farmers involved in modern value chains earn much higher by bypassing the traders • Large and medium farmers have the resources to meet the requirements of the chains, easier to co-ordinate • Development efforts: linking small farmers to these chains

5. Emerging Models • Co-operative (HOPCOMS, Karnataka; Mother Dairy, Delhi) • Exports with EUREPGAP Certification (Namdhari Fresh, Bharti Airtel) • Farm to Fork -- Complete Chain (Godrej, Reliance, ITC) • Wholesaling – (Adani Fresh, Metro) • Front end – Convenience Stores (Food Bazaar, 3Cs) • Economy Stores (Subhiksha)

6. Requirements for Setting Up the Chain Infrastructure (Back end to front end) • Collection center • Soil-testing Laboratory • Packing House/Distribution Center • Packing infrastructure -- tables • Cold-Storages • Transportation – Refer trucks • Retail outlets • Real estate • Investment in refrigeration facilities at the stores

7. Requirements for Setting Up the Chain Knowledge Inputs • Extension advice to farmers: • use of different varieties • production techniques • harvesting (time of harvesting, harvesting techniques) • grading/sorting, packaging • Setting up Grades and Standards for purchase by the company • Training staff at packing centers (grading, sorting, packing) • Post-harvest experts (handling and storing needs of different F&V) • Cold Storage Technology (?) • Packaging Technology for Fresh

8. Requirements for Setting Up the Chain Co-ordination • Developing linkages with farmers • Inputs for farmers (Credit, seed, fertilizers, pesticides, harvesting tools, packaging materials) Information flow • Communication regarding the quantity and quality needs in the company • Communicating the requirements to the farmers

9. Issues in setting up the chains • Developing linkages with farmers • Post-harvest manpower • Commitment from farmers • Infrastructure (level of operation, not everyone needs to invest or can invest in packing house) • APMC Act (paper work, operational hindrance, time involved, grading, sorting, packaging) • Farmer’s training in pre-cooling, storing, grading, sorting, packaging • Packaging technology for fresh

10. Areas of Intervention by Govt/Donor Groups • Create an enabling policy environment that promotes mutually beneficial partnerships between farmers and organized sector • To give credibility to the project (low faith/fear) in dealing with corporations, • Develop linkages with small farmers • Training to farmers regarding post-harvest issues • Investment in Infrastructure: Not all firms dealing in fresh fruits and vegetables have the level of operations to set up cold stores and packing houses. To give a level playing field to the smaller firms, govt. investment in cold storages and packing houses will be useful. • Investment in transportation infrastructure – refer trucks, (import taxes? subsidy?) • Air-port infrastructure for shipping, cold-storages,

11. Example (USAID) USAID/Michigan State University Partnerships in Food Industry Development in Nicaragua, (Weatherspoon and Membreño, 2004). • US university facilitates the market connections for small farmer organisations with the local supermarket chains, • NGOs (Technoserve) provide technical assistance • Supermarket chains -- CSU and La Colonia provide the guaranteed market • Donor funds from USAID provide the financing. • The project has a graduation policy whereby the small farmer organisations progressively take over the needed investments and then maintain the market link themselves

12. Example Governments, NGOs, and donors can facilitate tri- or quadri-partite relationships that facilitate smaller farmer participation. • Example, melons in Indonesia, Reardon (2004) • Small farmer organisation (Makar Buah), • Supermarket chain (Carrefour), • Seed/chemical company (Syngenta), • Government extension programme, • Specialised/dedicated wholesaler (Bimandiri) • Carrefour provided guaranteed market, Syngenta the financing, and the wholesaler the intermediation and coordination